Ten Commandments of Investing: Guiding Principles from the Greatest Investment Wizards by San Eng

Commandment One:
KNOW THYSELF
Everyone Is an Investor
You are an investor, whether you know it or not. No one told you this at
school. You might not even have an investment account. But believe us:
everyone is an investor, so this book matters to you.
A young teenager may not have her own investment capital, but how
she invests her time—to learn or to play—and finds a circle of close friends
determine the kind of person she will be in the future. No matter how much
wealth they have, adults also make investment decisions every day when
they choose to invest their hard-earned income—in cash, in entertainment,
in a mortgage, in their education, in the stock4 market, in a business, or in a
retirement account.
Two percent (2%) is the target annual inflation rate set by the U.S.
Federal Reserve, the central bank controlling economic growth through
interest rates and monetary policies.5
If you earned $100 today and swept it
under the rug, the same $100 note will lose two dollars in value one year
later. Five years later, it will only be worth approximately $90 in today’s
value. By holding cash, you have decided that you are okay with an annual
return of negative 2%.
The US treasury bond6—a “risk-free” investment because the US
government very likely will not default on its debt—will return 2% to you
annually in normal times. Ideally, the treasury bonds will match the
inflation rate, so you have a nominal return7 of 2% (and a real return8 of

0%). Riskier investments, like stocks and real estate, may at times under-

perform bonds’ stability, but can provide more attractive returns in the long
run if market growth is healthy and you invest shrewdly.
Money can buy you happiness. According to Twenge and Cooper’s
research, representing 44,198 adults from 1972 to 2016, the correlation
between income and happiness has steadily risen among those 30 years or
older.
9 The happiness of people without a college degree deteriorated, while
those with higher education and income remained steadily happy. Another
study by Nobel Economist Kahneman indicates that the emotional well-

being of a person increases until his or her income hits a certain magic
number—$75,000 in 2010 (more today, accounting for inflation).10
Considering that, in 2017, less than 10 countries had a per capita GDP
above that threshold, most people in this world would stand to benefit from
better financial literacy.
11 We hope this book will further that goal by
teaching smart investment principles, improving standards of living and
happiness.
So, since we are always investing, why not be great at it? Between the
choice of -2% return on cash and at least a 2% long-term return by
investing in assets, who would decide not to invest?
Tap Dance, Don’t Work
Investing can be daunting at first. The financial jargon, the uncertainty, and
the volatility can make it seem like a casino that’s impossible to beat.
However, there are Wizards everywhere who learned the ropes of investing
and developed effective systems to consistently do well in the markets.
Much like how pro athletes love their sports and die-hard musicians can’t
live without their instruments, great investors all share common passion and
enthusiasm for what they do. In most cases, their passion is so great that
they even share their philosophies with the world.

Ten Commandments of Investing: Guiding Principles from the Greatest Investment Wizards by San Eng